What Makes Pacific Gas & Electric (PCG) an Investment Bet?

Greenlight Capital, an investment management company, released its third-quarter 2025 investor letter. A copy of the letter can be downloaded here. The Greenlight Capital funds returned -3.6% in the quarter, net of fees and expenses, compared to 8.1% for the S&P 500 index. The fund returned 0.4% in YTD compared to 14.8% for the index. For more information on the fund’s top picks in 2025, please check its top five holdings.

In its third-quarter 2025 investor letter, Greenlight Capital highlighted stocks such as PG&E Corporation (NYSE:PCG). PG&E Corporation (NYSE:PCG) is a Pacific Gas and Electric Company, which sells and distributes electricity and natural gas. The one-month return of PG&E Corporation (NYSE:PCG) was 9.05%, and its shares lost 19.82% of their value over the last 52 weeks. On October 23, 2025, PG&E Corporation (NYSE:PCG) stock closed at $16.30 per share, with a market capitalization of $35.903 billion.

"We established a medium-sized position in PG&E Corporation (NYSE:PCG) at an average price of $15.15 per share. PCG is a California-based regulated utility that transmits and distributes electricity and natural gas. In theory, regulated utilities operate as local monopolies that earn a guaranteed return on capital invested. This includes passing through costs from catastrophes such as the wildfires in California. In practice, these cost recoveries are sometimes complicated by politics, which can also lead to unexpected outcomes. As a result, California-based regulated utilities have a much higher cost of capital than non California-based regulated utilities. This higher cost of capital directly passes through in higher prices to California residents. Affordability has become a hot-button political issue in California, and state officials are focused on solving this through reform.

In January, Los Angeles suffered a disastrous wildfire. While PCG was not involved, Edison International (EIX) was, and related claims are expected to consume most (or all) of PCG & EIX’s shared California Wildfire Fund, an important defense against wildfire related damage claims. On the heels of this, PCG’s earnings multiple collapsed to a low of about 8x. We invested with the view that the legislature was likely to put in place funding support for the California Wildfire Fund and make further wildfire risk reform a priority. Since we invested, we’ve seen positive progress on each of these initiatives and believe that as tail risk recedes, PCG shares should close the discount to the nearly 18x average multiple for the sector. PCG ended the quarter at $15.08."

PG&E Corporation (NYSE:PCG) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 77 hedge fund portfolios held PG&E Corporation (NYSE:PCG) at the end of the second quarter, up from 76 in the previous quarter.  While we acknowledge the potential of PG&E Corporation (NYSE:PCG) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered PG&E Corporation (NYSE:PCG) and shared the list of best large cap stocks to buy under $20. In addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.